Can SC be used as a gift economy? What would the legal status be?

Hello SC community,

my first post. I’m very interested in SC.

I’m wondering this: if the people freely gift their time/energy/resources to the project and the community governed organization chooses to GIFT (some of the) profits back to contributors as GRAIN based on the CRED scores. But it’s not legally forced to do so…

And since CRED cannot be sold and doesn’t hold any real claim over the future revenue…

How would the relation between the organization and the contributors legally be seen? Would they be seen as equity holders? Would they be employees? Contractors?

I’m thinking of potentially applying this in a community governed organization, that in the beginning would be incorporated as a regular organization (currently in the Netherlands) and make revenue in “regular” fiat. To later become more decentralized…

Would such a system be able to exist in the current legal systems? Are you aware of any systems that work like this?

Hi Rene, and welcome to SourceCred! These are great questions! :slight_smile:

I am not a lawyer, so don’t take my words below as true from a legal point of view. This is merely how I understand it, but should help you some at least:

Since there is no contract involved whatsoever for the people working on SourceCred at least (I can’t speak for other DAOs using SC, but I think it’s generally the same with them), we are technically considered volunteers from an employment standpoint.

That said, because we receive money (in the form of Grain, which the IRS technically considers income), on a regular basis (weekly), for the contributions we make (labor), there may be all sorts of employment law regulations involved. With the Netherlands in particular, I recommend asking the KvK about how this could or would have to work; the NL* has a lot of strict regulations and laws that don’t exist here (and perhaps vice-versa), so anything we say about how it works in the USA won’t necessarily be true for your situation.

As for organizations starting out this way and become decentralized later: this is pretty common, though I don’t know about the legal implications.

* NL is where I’m from myself, though I live in San Francisco now :slight_smile:

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Volunteers who receive all of their living expenses from an organization are employees.